Computers and the Internet have dramatically changed the way creative works are distributed.
In the old days, making a copy of something required a physical medium: paper, cassette tape, CD, videotape, DVD, etc. But now anyone can post a copy of something online and anyone else can read, listen to, or watch the content directly from the net.
What that means to copyright holders is that in the old days, they didn't have to worry about individuals copying something for their friends. The cost limited the number of such copies anyone would make. (In the case of books, it was generally cheaper to buy another copy of the book than to photocopy it.) So copyright holders ignored individual copying, and focused their attention on people with bulk copying facilities who sold large numbers of copies illegally. But today, the big threat to copyright holders is individuals, especially when the individual posts the illegal copy on the web rather than just emailing it to people they know personally.
Marginal cost means the cost of making one more copy of something, once you have the something, and the machinery to do the copying. This applies to anything, not just copyrighted material. For example, the cost of flying an airplane is made up of fixed costs, such as the salary of the pilot and crew, and the fuel necessary to hold up the weight of the airplane itself; plus the marginal cost per passenger, which is just the fuel necessary to lift that passenger's weight.
Economists say that in a perfect free market, because of competition, the price of anything quickly falls to match the marginal cost. But if all airplane tickets cost only their marginal cost, the airline would lose money because of the very large fixed costs. That's why they sell first class tickets and other such ways to persuade those who can afford not to take the lowest price to pay more than the marginal cost.
Now think about copyrighted works. In the Internet era, the marginal cost of one more copy of a book, song, or movie is zero.
So, the purpose of copyright is to prevent a perfect free market through legal restrictions. Those political conservatives who like both free markets and copyrights (that's not all of them) are contradicting themselves.
That's a slogan that arose in the early days of the Internet, to argue against copyright. Since everyone can copy everything so easily, according to this argument, the idea of artificially restricting such copying is doomed to failure. Copyright is obsolete.
But in a zero marginal cost world, copyright is also more important than ever! In the old days, copying was limited by the physical cost. Now there's nothing but copyright allowing artists to support themselves.
Do a web search for "Information wants to be free" and find arguments for and against that view.
Computers and the Internet support the free exchange of media, but they can also be used to prevent it. Many digital media are distributed in encrypted form. Purchasers (or their friends) can't play the media unless the software that comes with them is used to decrypt them, and the software will refuse to do so unless certain conditions are met. These conditions can be anything the publisher wants. Maybe a file can only be played on a particular computer. Maybe there can't be two copies with the same serial number. (The software uses the Internet to connect with a DRM server to check this.) Maybe the file times out on a particular date and can never be played again.
DRM software is a big change in the social contract. Remember, the idea of copyright is that eventually it expires, and the work is in the public domain, freely copyable by anyone. But DRM allows publishers to have it both ways: they get copyright protection during the time when a work is most popular, and they get DRM protection forever. The publisher's control over the material never ends.
The DMCA is a US law that went into effect in 1998. It makes it a crime to figure out how to defeat DRM systems, whether or not a copyright is actually violated. It protects Internet service providers and web site operators from third-party copyright violation penalties (for example, if you post a copyrighted video on YouTube, YouTube is not liable) provided that the operator removes the infringing material as soon as it is notified of the violation. If the original poster thinks the material does not violate a copyright, the burden is on her to prove it.
Temporary exemptions to the anti-circumvention part of the DMCA can be made by the Librarian of Congress (a surprising choice, since the Library of Congress previously wasn't involved in judging copyright issues) for a three-year period, but any such exemption must be renewed by the Librarian every three years. Most such exemptions are made for technical reasons, e.g., to allow one piece of equipment to work with another piece of equipment from a different manufacturer. But there was great excitement in 2010 when the Librarian of Congress allowed people to jailbreak their cell phones (but not their tablets).
What follows are two examples of manufacturers using the DMCA in creative ways, possibly not for purposes envisioned in the original copyright provisions.
Inkjet printer manufaacturers don't make much money when you buy a printer; fierce competition drives prices down to their marginal cost. Instead, they make their profits when you buy replacement ink cartridges, because you have to buy ones that fit the printer, and they generally come from the manufacturer. Lexmark, a printer manufacturer, developed a technology by which printers would not use cartridges unless they provided a Lexmark digital signature; the same cartridge could not be reused after its ink ran out the first time. Another company reverse-engineered the cartridge and created their own cartridges that would work with Lexmark's printers. Lexmark sued under the DMCA, claiming a copyright violation because the other company copied the tiny program in the cartridge that provided the signature. After several appeals (one technical legal aspect of the case went to the Supreme Court), the ultimate decision was against Lexmark; what they did was found not to be a legitimate use of the DMCA.
If you look at the fine print on the back of a DVD case (okay, you never buy DVDs, but your parents have some), you'll probably find something like "this DVD is licensed for sale in North America," or maybe "North America and Europe." This restriction is enforced by DRM. Your DVD player knows what region it's in. You're allowed to change the region code of the DVD player, but only twice; after that, the DVD player refuses to change its region.
The purpose of this system is to allow film companies to sell DVDs cheaply in poor countries, but charge a lot more in rich countries. Without region coding, people would import DVDs from the poor countries and resell tham here. Region coding can also be used to allow different versions of a film in different regions to account for different censorship rules, either about political views or about sexuality.
This region coding system is protected by the DMCA, although in practice it is widely subverted, since DVD encoding was already broken before the DMCA. Arguments have been made that region coding violates free-trade treaties that disallow most restrictions on exporting goods from one country to another. It would definitely be a treaty violation if the US government had invented region coding, but since it's a creation of private companies, the question has not been settled. But the DMCA itself can be seen as the government enforcing the region coding.